You're Probably Getting Screwed by Dollar Stores

The duopoly screwing small businesses, workers, consumers and communities.

Welcome to You’re Probably Getting Screwed, a weekly newsletter and video series from J.D. Scholten and Justin Stofferahn about the Second Gilded Age and the ways economic concentration is putting politics and profits over working people.

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A class action lawsuit was brought last week against dollar store behemoth Dollar General alleging a pricing scam that lead to hundreds of thousands of consumers being charged more for items at the register than they were priced on the shelves. Last year Ohio Attorney General Dave Yost sued the company for similar deception, resulting in a settlement. This comes on the heels of yet another new study (mentioned below) showing the high inflation of recent years is being driven by powerful corporations. However, false advertising is just one way in which dollar stores are screwing folks. 

Source: Money.com

The dollar store industry is a duopoly controlled by Dollar General and Dollar Tree, which also owns Family Dollar. Dollar General has over 19,000 stores and Dollar Tree has nearly 16,000 and they have experienced explosive growth. Dollar General has seen annual revenues increase from less than $5 billion in 2006 to nearly $38 billion in 2023. In 2021 over half of all the new stores that opened in the US were dollar store chains and Dollar General has plans to open another 800 stores in 2024. 

In a way, dollar stores are picking up where the destruction of Walmart’s growth to controlling 25% of the US grocery market, left off. As a result these discount chains heavily target vulnerable communities including low-income rural areas that have been hollowed out by corporate consolidation or communities of color in urban areas where Dollar General and Dollar Tree will blanket communities in multiple stores as has been documented by the Institute for Local Self Reliance (ILSR).

Source: Institute for Local Self Reliance

Because of the wide variety of goods the discount chains sell, they pose a threat to a number of local businesses but independent grocers are particularly vulnerable. For example, a survey of rural grocers in Minnesota found that after operating costs, dollar stores were the most significant challenge identified by respondents. One grocer in the survey said that with two dollar stores already located in town and a third on its way in a nearby town they did not plan to allow their children to take over ownership. This sort of thing dramatically alters people’s way of life and economic future. Dollar stores are primed to snuff out the few independent grocers that managed to survive Walmart and other big box threats, which in addition to the obvious economic impacts of losing a local business, leaves vulnerable communities with less access to fresh food.

Dollar stores are also bad for workers. According to ILSR the average independent grocer employs 14 people while the average dollar store employs just six. In addition to lost jobs, workers also see wages decline as most dollar store employees earn under $15/hour. 

Source: Economic Policy Institute

Like other monopolists, the rise of dollar stores is not inevitable nor will consumer activism fix the problem. Working class families cannot be faulted for seeking out low prices, even if those prices are not as low as they appear. Oftentimes consumers do not even have a choice as businesses are pushed aside by the anticompetitive behavior of discount chains.

The dollar store duopoly exists because of the lax approach to antitrust in recent decades. This includes the Federal Trade Commission (FTC) allowing Dollar Tree to acquire Family Dollar in 2015 with the only condition being the companies had to sell 300 stores to….a private equity firm!

But mergers are just one piece of this. If Walmart started this, that company’s rise was enabled by the repeal of laws that prohibited predatory pricing along with the initial abandonment of the Robinson Patman Act, an antimonopoly law meant to prohibit companies like Walmart from using their market power to extract favorable deals from suppliers. This is the kind of predatory buying that dollar stores are now engaged in. Because of the abandonment of our antimonopoly laws dollar stores have retail prices lower than a small grocer can get wholesale and discount chains can demand cheater sizes, which are packaged goods 10–20% smaller than those sold in regular outlets. 

Fortunately leaders at the FTC are interested in reviving the Robinson Patman Act, particularly FTC Commissioner Alvaro Bedoya, but states can also play a role. Legislation in Minnesota would put elements of the Robinson Patman Act into state law, something over 20 other states already have, but has not been used by Attorneys General in decades. Local communities, big and small, are also enacting restrictions on dollar stores.

Now is the time to put a halt to the dollar store invasion threatening the future of our communities! 

YOU’RE PROBABLY (ALSO) GETTING SCREWED BY:

Greedflation

A new study shows that corporate profits drove 53% of inflation for 2023, as corporate profits remain at all-time highs.

During the 40 years prior to the pandemic, profits drove just 11% of price growth.

Billionaires 

Sports Illustrated had massive layoffs this week. Allegedly, the 70 year old magazine isn’t dead yet as this headline suggests:

Dark Money

The Citizens United decision turned 14 years old this week and continues to be one of the biggest threats to our country. And it’s getting worse!

If you want to help fight corruption, End Citizens United has ways you can get involved.

JBS

Did you ever wonder how a company like JBS was able to take over the meat industry in the United States? Here’s how you do it:

First you bribe 1,800 elected officials and get billions of dollars. When you’ve exhausted that money by buying out U.S. meatpacking companies like Swift, Pilgrim’s Pride, and Cargill’s pork division, your next move would be to go to Wall Street to get billions more so you can buy out the rest of your competitors. 

With JBS’ plan to go public on the New York Stock Exchange, the most corrupt corporation on the planet aims to secure the capital to complete its takeover of the world’s meat industry.

Koch Industry

More on the nitrogen monopolist trying to buy Iowa Fertilizer Co. who was created to promote competition and was given over $500 million in tax breaks, including over $100 million from the state of Iowa.

Here’s a good minute and a half video about the merger:

Tax Prep Software

The owner of tax prep software TurboTax spent more money than ever before in 2023 on lobbying the government as it fought the Biden administration’s plan to create a free electronic system for people to file their taxes directly with the government.

Luckily, it failed!

In May, the Biden administration announced it would create a Direct File program, which is on track to be available in a limited-scope pilot in the coming months as people file their 2023 taxes. 

Meat Processing Plants

A Mississippi poultry plant’s disregard of safety policies was directly to blame for the death of a 16-year-old boy who was fatally injured in July after being pulled into a machine there, the Occupational Safety and Health Administration said on Monday.

BEFORE YOU GO

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Break Em Up!

Justin Stofferahn